It will be “quite difficult” for the European Commission to submit a formal review of the revised EU pension fund legislation by 2023 as originally planned, Didier Millerot, head of the insurance and pensions unit at the European Commission, told a conference yesterday.
“We expect quite some delay in the process unfortunately,” he told delegates of a conference on asset management for occupational pension funds organised by the Institute of Finance and Financial Regulation.
He said the Commission was still in the process of assessing how the IORP II Directive had been transposed by member states, a process that was “taking more time than we hoped”.
“It is therefore difficult to assess whether the review has been a success or not.”
Millerot’s comments are in line with a previous report from IPE; at the time a Commission spokesperson said the Commission “cannot exclude a possible delay of the review process”.
Millerot said that despite the delay, the Commission would “certainly come back on this important piece of law in due time, starting with a mandate to EIOPA in the course of next year”.
He proceeded to mention a study the Commission started to examine best practices of automatic enrolment systems, saying it would soon discuss the results of the study with member states but that it was “much too soon to envisage any concrete follow-up”.
“This remains a sensitive matter,” he said.
Millerot also said the Commission would be discussing EIOPA’s advice on dashboards and national tracking systems and the possible follow-up. He also spoke about personal pensions, saying the pan-European personal pension product (PEPP) had a “big potential”.
“We hope it will be a success and count on all actors, the industry, the supervisory community in particular, to make it a success,” he added. “The Commission will play its part in the process.”
The PEPP regulation enters into force on 22 March, 12 months after the regulatory technical standards were published.
Justin Wray, head of policy at EIOPA, also gave a presentation at the conference. On the topic of the IORP II review, he said “let us remember that a European approach to pensions has benefits”, and listed the internal market in terms of aspects such as labour mobility and capital markets, member protection, transparency, and “Europe as a force for improvement”.
However, he said the current European framework had not succeeded in creating an internal market for occupational pensions.
He attributed this to several reasons, such as the diversity of pension arrangements across countries and to the IORP II Directive being minimum harmonisation, with its requirement for pension schemes to be fully funded at all times meaning different things in different countries so not being “overly conducive” to pension fund members in one country trusting the funding status of a pension fund in another country.
Wray also said there was no common definition of the boundary between prudential matters and what is social and labour law.
EIOPA recently reported that there were 33 active cross-border pension funds in the European Economic Area at the end of 2020, representing 0.2% of IORP members in the region and 0.4% of assets under management. At the end of 2016 there had been 73 active cross-border funds, with Brexit the main reason for the drop in numbers.
EIOPA’s work on the IORP II review will come on the heels of Sweden becoming one of Europe’s main pension fund countries, with Folksam the latest life insurer pension provider to seek IORP status.